President Obama signed the “Hire Act” yesterday in a Rose Garden ceremony. This bill will impact any employer hiring individuals that have been unemployed for at least 60 days. The legislation allows employers an immediate credit of the employer portion of the Social Security tax remitted during regular tax deposits. This credit will first appear on a quarterly form 941 during the second quarter 2010.

From our Payroll Provider ::

“We are currently working closely with the Internal Revenue Service so that we can assist you in taking the credit as soon as possible. Our Development Team will assist with a technical solution to enter and track the credit as soon as we receive guidance from the IRS. The IRS has stated that the 941 will not be revised for the 1st Quarter of 2010. Any Social Security tax paid for eligible workers during Quarter 1 will be credited during the 2nd Quarter of 2010.”

Here is an explanation of what this mean ::

Employer Social Security Tax Credit

The 6.2% Employer Social Security Tax exemption applies to 2010 wages paid after March 17, 2010 and before January 1, 2011, to individuals hired after February 3, 2010, who were previously unemployed for at least 60 days and who do not exceed the $106,800 Social Security wage base. There is no limit to the number of qualified workers each employer can hire, nor to the total amount of the tax credit. The maximum credit per employee is $6,621.60.

Tax Credit for 52 Consecutive Weeks

Employers will receive an income tax credit, which is either $1,000 for each qualifying worker hired after February 3, 2010, and employed for at least 52 consecutive weeks, or 6.2% of wages paid to the qualifying worker over the 52-week period, whichever is less. Wages paid during the last 26 weeks must be at least 80 percent of wages paid for the first 26 weeks.

Eligibility Requirements

Covered Employees must sign an affidavit, under penalties of perjury, that they were not employed for more than 40 hours during the 60 day period immediately preceding their hire date. The 6.2% Employer Social Security Credit and Consecutive Employment Credit are only permitted if the employee is hired in a newly created position, or to replace an employee who separated from employment voluntarily or for cause.

When donors make gifts near the end of the year, the question inevitably arises: “is the gift deductible this year?” Hopefully, this will help answer any questions you might have…

To qualify as a gift in a respected year, federal regulations require that checks must be dated on or before December 31 AND, the envelope accompanying the check must be postmarked by December 31 as well. The date the envelope is metered is NOT the same as the postmark date. For instance: if an envelope has a meter date of December 30, 2009 and a postmark date of January 2, 2010, then the transaction is recorded as a 2010 donation.

For hand delivered checks, the date the check is received determines which year to record the donation.

A postdated check is a check that is dated in the future. Postdated checks are not recognized as a donation until the day of the date of the check.
For example, suppose the church receives a check on December 30, 2009 but the check is dated January 1, 2010. In this instance, the donation is classified in 2010.

All this being said, when receiving year end donations, please be sure to use the above explanations when classifying donations. If we maintain your donor database, please be sure to let your bookkeeper know what calendar year the donation should be recorded. Generally, if the check is dated on or before December 31, 2009, we will assume it is a 2009 donation. However, if the postmarked date is AFTER December 31, please be sure to specify that on the copies of the checks / deposits that you send us.

As always, don’t hesitate to contact us if you have any questions regarding this.

Ok, I know I haven’t posted in a long time… I’ve actually been waiting to post, purposely! However, this one couldn’t wait. It’s a great article…

The current economic situation has only intensified the ever-present need of executives of small and mid-sized nonprofits to find cost-effective ways to reduce overhead costs. According to a new report released by the Meyer Foundation and the Management Assistance Group (MAG), outsourcing is a promising strategy for these nonprofits to meet their back-office needs, but there are many barriers that prevent outsourcing success.

The study, “Outsourcing Back-Office Services in Small Nonprofits: Pitfalls and Possibilities,” is based on a survey of grantees of the Foundation, interviews with grantmakers, consultants, and a range of back-office service providers, and a review of current literature on the subject. The goal for the collaboration was to survey and identify alternative back-office services that could strengthen operations, relieve the pressures on executive directors, and lead to greater efficiencies, particularly in this difficult economic climate.

Key findings include:

Outsourcing may not offer short-term cost savings but can offer significant long-term benefits and cost savings.

Current business models for outsourcing are often not well suited for serving small to mid-sized organizations, many of which are complex and have significant unmet needs.

There is a significant opportunity for business entrepreneurs with a deep knowledge of and sensitivity to the nonprofit sector and innovative new business models.

Areas most in need of better solutions include human resources, marketing and communications, and financial planning.

Barriers that prevent nonprofits from outsourcing back-office services include the inability to find specialized skills at a reasonable cost, lack of time to find and contract with providers, and negative past experience.

The 48-page study offers ideas for grantmakers, back-office service providers, nonprofit executives, and business entrepreneurs as they consider how to better meet the back-office needs of nonprofits and proposes a framework for evaluating outsourced back-office services.